IFC Production, an automobile parts company, was attempting to raise capital to finance expansion in Mexico. In order to secure financing, the lender banks required an appraisal of the IFC's financial risk management equipment. IFC had exposures to foreign exchange and interest rates.
The case allows for discussion of numerous problems, including internal controls (the Group of Thirty recommendations for great derivatives practices), risk measurement, and management. Data is supplied, which enables students to qualify transactional and translational risk exposures. Information is, in addition provided, enabling pupils to assess IFC's portfolio of hedging instruments including the three options average rate as well as both single and double barrier and lastly, plain vanilla options.
Publication Date: 06/08/1999
This is just an excerpt. This case is about Finance
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